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Receivership Law Related Questions

What is receivership?

A receivership is a certain situation that sometimes occurs in which a selected person takes over a failed business. The goal of this is to recover the business from its failing status. There are different ways that receivership can occur. Sometimes, the creditors of a company may get a receiver so that the receiver will save as many assets of the company as possible so the creditors get their money. In other situations, the court may appoint a receiver as a certain term for a company that has filed for bankruptcy. And yet another way for a company to land themselves in receivership is if the government sees that the company is failing and gives it that status to where a receiver would be necessary.

If a company is in receivership, is it possible for that company to file for Chapter 7 bankruptcy?

It is very possible for a company to file for Chapter 7 bankruptcy even if they are in receivership. Filing for Chapter 7 bankruptcy would immediately end the receivership. By ending the receivership, the company would then be exclusively liquidated, and since a Chapter 7 bankruptcy would be filed, no assets would be lost, and no debts would be owed depending on how the outcome of the bankruptcy case went.

If the home a person is renting month-to-month is in receivership, what are some things one can do to protect themselves so they will not have to move out?

In this type of situation, there are not many options for a tenant. What they can do is limited to how their contract for their lease is made. Since the person has only a month-to-month lease, the owner of the property only needs to notify the tenant one month in advance if they do not wish to continue leasing the property out. The one thing that may be possible is for the tenant to notify the bank that is taking over the property from the owner. They may agree to strike a deal with the tenant and start a new lease so that the tenant will not be forced to move on such short notice.

If a company provides services for a certain building that is in receivership, should this company expect their money to be paid?

When a building is under receivership then they will recover any money that can still be recovered from the building and the business. In this situation, the company that provided the building with their services would be considered an unsecured creditor. When the money from this building is recovered, it will be used to pay the costs for receivership, and then usually it will be distributed among secured creditors. Once that has been done, the money will go to employee wages and other priority claims. If any type of money is left over, even if in assets, it goes to unsecured creditors. There is not much one can do to guarantee themselves that they will be paid, but it is best to wait and see if anything is left to be given.

Is it possible for a receiver to reject a contract or agreement like a trustee?

In a situation like this, it usually depends on the type of contract or agreement that the person wants to reject. If it is a proposed contract or agreement, a potential receiver can reject it. If it is a contract or agreement that is in existence and the receiver has already agreed some time before, then it would depend on the type of receiver, and what terms the court made when the receiver was appointed. When the contract or agreement has already been made, rejection is only allowed to be done if the law over the type of business and receivership allows it.

When it comes to receivership, people may or may not want to have it in their specific situation. Generally the actual business or owner of the business does not have any say if a receivership is appointed to it. A receivership can be very beneficial, but if any questions arise about it or anything else, ask the Experts.

In Nov of last year I was granted a C7 (no asset) discharge in Boston that amongst other things, discharged my personal liability for a loan guarantee that I had signed for a business that I owned/operated many years before that went into receivership before being dissolved. As part of that guarantee for the business bank loan, we gave them a mortgage against our primary residence. Here's my question, as the mortgage was part of my personal guarantee/liability for the business loan and my personal liability for the guarantee was discharged, doesn't that also eliminate the lien/mortgage that it was tied to ? The bank has dropped their civil action against me as part of the discharge, but refuses to remove the lien saying the court didn't require them to do so.

I was granted a (no asset) personal C7 discharge towards the end of last year. After I had filed, I got a notification of a new action naming me personally for trade debts owed by an LLC that I owned/operated several years before that went into receivership and was finally dissolved (back in 2007). I live in MA and this suit was filed in MD. As I did not know about the suit and still maintain that I have no personal liability for accounts of the LLC, I did not list it in the petition as I hadn't listed any debt of hte former company. I had originally responded to the suit in a motion for dismissal saying I wasn't liable personally, that they lacked jurisdiction, etc., and just found out that the MD court is allowing it to go forward as they cannot determine the case on the papers and I certainly am not going to spend the time and $$ to go down to MD to defend it. Now I want to notify them of the discharge rather than just let a default judgment go in against me in some MD township. Who do I notify and how do I notify them of the discharge ?

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